Common Questions and Answers on Due Diligence

The ability to conduct effective due diligence is an essential element of the M&A Process. Being aware of the most commonly asked questions and the answers to due diligence will ensure that you can identify potential risks and make an informed investment.

What is your approach to solving any discrepancies that arise during the due diligence process?

The interviewer is interested in your approach to deal with a situation when there is a contradiction in public records and internal documents. They are looking for your ability to spot the issue, conduct the necessary investigation, and then act to resolve it. This test also tests your attention to detail as well as your ability to meet tight deadlines.

How do you determine the quality of financial data for a company?

The goal of the buy side is to determine if the company is able to pay its debts as well as other obligations. This is done by analyzing the cash flows of a company and comparing them with the cash flows www.bydataroom.com/what-are-the-pros-and-cons-of-an-ma-deal/ of its competitors. It is important to understand the company’s current assets (accounts receivable and inventory) and liabilities (accrued payroll, accounts payable, and accrued interest).

What are the steps you can take to safeguard confidential information during due diligence investigations?

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